Tucows Q2 2026 Earnings: Ting Drives Gross Profit Growth Despite a Wider Net Loss

Tucows (NASDAQ: TCX; TSX: TC) reported Q2 2026 revenue of $100.6 million, up 2.1% from $98.5 million a year earlier, while its GAAP basic loss per share widened to $1.84 from $1.41. Gross profit rose 16.6% to $25.8 million as Ting’s profitability improved, but Tucows still recorded a $20.5 million net loss and a slight decline in adjusted EBITDA.

Core Earnings Data

Revenue growth was modest, but gross profit increased much faster as Ting generated higher margins and network expenses declined. The resulting gross margin expanded by approximately 3.2 percentage points year over year.

Sequential trends were also positive: compared with Q1 2026, revenue increased 4.0%, gross profit rose 7%, and adjusted EBITDA improved 5.4%. On a year-over-year basis, however, higher Wavelo investment and legacy mobile obligations kept adjusted EBITDA slightly below the prior-year level.

Adjusted net income, adjusted EPS, and adjusted EBITDA are non-GAAP measures. Tucows’ EPS figures in the release are presented on a basic rather than diluted basis.

Business and Segment Performance

Ting was the clear source of growth and margin improvement. Tucows Domains preserved nearly all of its gross profit despite lower revenue, while Wavelo and Corporate & Other reduced the benefit of Ting’s turnaround at the consolidated adjusted EBITDA level.

Ting’s fiber internet revenue increased to $17.5 million from $16.4 million. It also generated $4.1 million of construction services revenue, compared with none in Q2 2025. Management attributed Ting’s improvement to subscriber growth and construction activity.

Tucows Domains revenue declined to $65.0 million, but gross profit remained nearly unchanged at $19.3 million. Within the business, value-added services revenue rose to $6.3 million from $5.8 million, partly offsetting declines in wholesale domain and retail revenue.

Wavelo experienced broader pressure: revenue, gross profit, and adjusted EBITDA all declined. Management specifically identified continued sales and marketing investment at Wavelo as one factor weighing on consolidated adjusted EBITDA.

Ting’s Turnaround Was Offset by Wavelo and Legacy Mobile Costs

Ting’s adjusted EBITDA improved by approximately $5.2 million year over year, moving from a $3.7 million loss to a $1.5 million profit. That improvement was offset by declines of approximately $2.5 million at Wavelo, $2.3 million in Corporate & Other, and $0.7 million at Tucows Domains. As a result, consolidated adjusted EBITDA slipped by $0.3 million despite the substantial improvement at Ting.

The gap between stronger gross profit and a wider GAAP net loss also reflects expenses below the adjusted EBITDA line. Net interest expense increased to $14.5 million from $13.6 million, while acquisition, transaction, and transition costs rose to $2.7 million from $0.7 million. Tucows also recorded only a $48,000 gain on property dispositions, compared with a $1.8 million gain a year earlier.

Cash Flow and Liquidity

Tucows generated $1.9 million of operating cash flow during the quarter, keeping the measure positive but well below the $6.6 million generated in Q2 2025. The decline means improved gross profit did not translate into a comparable increase in quarterly cash generation.

Cash, cash equivalents, restricted cash, and restricted cash equivalents totaled $60.2 million at quarter-end. That was down from $61.9 million at the end of Q1 2026 and $68.6 million at the end of Q2 2025.

Investor Risks to Watch

• Bottom-line losses remain substantial: The GAAP net loss widened even as gross profit increased, showing that segment-level improvement has not yet overcome interest and other costs.
• Interest expense exceeds adjusted EBITDA: Q2 net interest expense of $14.5 million was higher than adjusted EBITDA of $12.3 million, creating continued pressure on profitability.
• Wavelo profitability is declining: Wavelo’s gross profit fell 23.3%, while adjusted EBITDA declined 47.2% amid lower revenue and sales and marketing investment.
• Legacy mobile obligations remain a drag: Corporate & Other’s adjusted EBITDA loss widened to $3.9 million, with management identifying legacy mobile obligations as an offset to Ting’s gains.
• Cash generation weakened: Operating cash flow fell 70.5% year over year, and total cash including restricted cash declined both sequentially and annually.

Summary

Tucows’ Q2 2026 results showed a meaningful operational turnaround at Ting, which drove faster gross profit growth and moved into positive adjusted EBITDA. However, weaker Wavelo profitability, legacy mobile obligations, transition costs, and interest expense prevented that progress from reaching consolidated earnings. The next key indicators are whether Ting can sustain its positive margins, Wavelo can stabilize profitability, and stronger gross profit can produce better cash flow and narrower net losses.